Mining firm Scotgold has announced it has secured £1.2 million in new funding to complete its assessment of its Cononish gold and silver mine development.

The Cononish development, within Loch Lomond and the Trossachs National Park, secured planning approval last year on appeal after being refused planning permission in 2010.

Scotgold - a subsidiary of Australian-listed mining firm Scotgold Resources, said it has secured a convertible loan with South African merchant bank RMB Resources for £1.18 million.

This new facility is structured as a secured corporate loan facility with share options which provides for RMB to acquire Scotgold shares at a cost equal to the value of the loan if all the options are exercised.

Scotgold will repay the facility, priced at Libor plus five per cent, by December 31, 2013.

The mining firm estimated it will need around £22 million in funding for mining to go ahead at Cononish, and a final decision on whether to go ahead with the development is expected by January of next year, with mining expected to get underway by March, 2013.

Estimates from tests at the Cononish site break down to 163,000 ounces of gold and 596,000 ounces of silver, based on a 3.5 gram of gold per tonne cut-off, Scotgold said.

Scotgold said in a development plan posted in March it expects to mine at an annual rate of 72,000 tonnes at Cononish, which it estimates will produce between 20,000 and 25,000 ounces of gold and up to 85,000 ounces of silver a year.

In a market update posted in April, Scotgold estimated investment payback would be achieved within 18-months at current gold prices, and forecast returns of 25 per cent over the 25 year lifetime at its Cononish mining project based on projected gold prices of $1,100 an ounce.

Scotgold also announced in January its first two test drillings at the River Vein prospect near Loch Lomond, five miles from the Cononish Prospect, had shown high gold grades and confirmed good silver, lead and zinc.

Then in March, the company said tests from its Sron Garbh exploration programme, five kilometres north east of Cononish, had shown up elements of gold and platinum along with copper, nickel and cobalt.

Scotgold said initial tests at Sron Garbh had shown similar mineralisation readings to major deposit finds in Aguablanca in Spain and certain parts of the Sudbury mines in Ontario, Canada.